tv Real Money With Ali Velshi Al Jazeera September 30, 2014 2:00am-3:01am EDT
the conversation continues on the website aljazeera.com/considerthis we are on facebook and twitter ♪ >> demonstrators flood the streets of hong kong in what could be china's biggest political challenge. you are looking at live pictures behind me, i'll look at how we got here and what is at stake. also america's trillion dollars student debt burden is weighing on a whole other sector, the housing market. plus the highway project that is going nowhere fast. i'll tell you what brought it to a grinding halt.
i'm ali velshi. this is "real money." this is "real money," you are the most important part of the show, so tell me what is on your mind by tweeting me or hit me up on facebook. it is being called an umbrella revolution in hong kong. tens of thousands of protesters occupying the streets and they are not leaving. they demand china back off moves to nominate candidates for the elections in 2015. the tactics to get them to disperse are not working. the sun is up in hong kong, the police have pulled back at least for a while. meanwhile the number of protesters camped out as swelled to as high as 80,000 for the weekend.
it's a very rare seen of discord in one of the world's biggest financial hubs. protestest similar 25 years ago that were violent by suppressed in the end. kong. >> reporter: exactly how many people are out here. what i can tell you is these protest verse taken up about two miles of this several-lane highway, which is usually busy day and night. i'm also hearing across the harbor in a couple of financial districts, they have also managed to take over those areas. police are standing by, but they have had very little interference. they are mostly watching very closely in pockets, not too visible. people are concerned that there could be a repeat of the tear gas that broke up protests several days ago. they have come with gas masks,
with cling film, and they have been handing out towels and other such items that would protect people from tear gas or pepper spray, but it has been largely quiet here. every now and then you'll see the momentum lifting with singing and chanting, but it's mostly people gathering and expressing their concerns. this is very important to beijing who are thinking about how they are going to handle these protests. there has been largely a lot of support for the protesters, mainly from the youth camp, but also from the older generations who are a lot more cautious but also have been expressing their desire for full democracy i hong kong. >> local residents have civil
liberties that are not enjoyed by most chinese like freedom of the press. the densely populated port was returned to chinese control in 1997 after a century and a half of british rule. hong kong was able to preserve some of the institutions that the british left behind. they include independent courts, and a low-tax ethos that helped turn hong kong into an international powerhouse. china also promised they would let them vote for their own leaders, but that changed last month when they gave officials veto power over those who may run. adrian brown has the story. >> reporter: china's leadership has been restrained in its events in hong kong, but it's
clear they think unnamed countries are behind the unrest. >> translator: we oppose any country that interferes with china's internal affairs. we also firmly oppose any country that supports the movement in any way. >> reporter: the student-led protests bring back uncomfortable memories of what happened in beijing more than 25 years when the occupation ended in bloodshed. but what will china do if unrest worsens in hong kong, where it has 6,000 soldiers. >> they don't need to go to the last step. it is very, very pragmatic to let the whole process run its due cause. and people will come to the realization that peace and stability are more precious than chaos and instability. >> reporter: but is this another hint of government thinking?
the article says china's armed forces could restore order in hong kong. it appeared on the website of the global times newspaper but has since been deleted. on the streets most people told us they were unaware of what was happening in hong kong. the few who did know say the protests have gone too far. >> translator: they have a legal right to protest, but occupying the city center is too aggressive. >> reporter: strict media controls have been tightened. state tv is mentioning though unrest but has not been airing photos. china hopes that the protest it calls illegal will simply taper out, expressing confidence that the hong kong authorities will contain the unrest and insisting it will never give in to the protesters demands. a display of
solidarity of the students in hong kong. its president spoke to al jazeera before the hong kong protests, insisting beijing must be prudent in how it handles decent. >> translator: it's not only important to the people of hong kong, the people of taiwan are also watching. >> reporter: but no one is watching more closely than china's government. >> this is all happening at a pivotal time in history, china is forecast to overtake the american economy this year, although it is slowing down. but it is still much lower than the double-digit growth china has been seeing for much of the last three decades. hong kong, you can see people are starting to mill around, many are sitting down and lying down as daybreak has set in. this has been the conduit for
foreign capitol fuelling that growth. so china's leaders have mostly agreed to let them be free, but that appears to be changing. the question is how far will china go to break up these protests. not reacting firmly enough could embolder disdense in the rest of china. militia chan spent over five years as the network's china correspondent. she joins us now from san francisco. melissa you understand this very, very well. the narrative is that this protest is about hong kong pressing for more control over who its local elected leaders are. but that's about half the story, isn't it? >> absolutely. that's definitely what people in hong kong are saying right now, but this is a story that has been long time going. frankly over the past decade or
so, the middle class have be shrinking. the rich are getting richer and the poor are getting poorer. so this is the economic situation in hong kong. prospects are really bad for people there. and it has being translated. there is a political call right now. you might wonder why people aren't making those economic demands. well it is because they have been for the last year. it goes without saying for the people on the ground that this is partly to do with the economy, they have just shifted the conversation right now. it's something that i do feel overlooking. >> let's talk about this. like we talk about the income divide, the difference between the rich and poor, that is magnified in a city like hong kong, when you are landing, it is gleaming, it's beautiful, it looks like one of the most prosperous places on earth, but
you find some of the most densely populated areas in the world. the property values that are some of the highest in the world that a working person in hong kong would sometimes find it hard to afford. >> absolutely. a lot of educated people in hong kong don't have the kind of employment tune that's they expect. that they expected back in the 1990s, for example. you see the discontent with college-age students. they are driving this protest now, because they are looking at their prospects and there isn't a future for them. for a people in their 30s and 40s, people do eventually want to move out, and start their own families, and you are looking at a housing crisis where people can't afford to do that. it has gotten so expensive, and there is a little bit of a mainland china element. because a lot of people from china internally have been
fuelling the housing boom, buying up property, and essentially squeezing out the locals and their ability to really buy a house in hong kong. >> i was saying that china has had relative freedom of the press. in the last month or so, there have been actions taken against newspaper that seem to have some connection to the prodemocracy movement, some advertisers have pulled some advertising. it's almost like china is encroaching its press restrictions into hong kong. i think that's something to watch for. >> that is absolutely something to watch for. and i think the really important thing to understand is that people in honk kong, there is a very robust civil society. they value things like press freedom. it is part of the economy, but part of the issue is of course the politics. they are used to a very free
willing media. it is more free willing than singapore, and arguably in japan where a lot of the media organizations have close relationships with the government. so people do not like that kind of infrankment, and over a decade ago people were already protesting when they considered that the rule of law was being violated by beijing and china. this is not the first time a lot of people in hong kong have turned out on the streets. there was a protest against a certain article in the hong kong constitution where people protested. it was a clause that said that people in hong kong could not say anything negative against the chinese government, and really, frankly, you are seeing that happen right now on the streets. >> interesting. melissa thank you for your analysis. up next, it has been six
years since the government bailed out insurance giant aig. now the ceo says it wasn't a bailout. it was extortion, and he is suing the government. plus the ripple effects of crushing student debt crisis. even the housing market is feeling the pain. those stories and more as "real keep it here. ♪ >> my name is shaquan mcdowell i'm a 17 year old teenager. i go to a public high school outside of the city limits of atlanta. it's 99% african american we do get a quality education. you know we have teachers that really care about us as far as the african american stereotypes, all the music they listen too is rap, they only use ebonics, they don't know how to speak proper english, they've never read a book in their life, all they do is get high, smoke weed, no... i've never been exposed to anything like that... coming from a mom who as a single mother, had her first child at 16, who is the ceo of her own company, me being someone who
is about to graduate, who is the recipient of a full scholarship, the stereotype is absolutely flawed. >> did it ever cross your mind that. being a single mother that, your children may end up like the statistics say they're gonna fail >> being a single mom... raising five kids, i've always said you guys, you be 100% the best that you can be >> i would like to run for the senate in 2032. then it leads to the great big goal in life, to run for the office of the president of the united states of america >> catch more stories from edge of eighteen on al jazeera america
american international group is the insurance giant bailed out by the u.s. government at a cost of $182 billion. well, today a lawyer for aig's former chief said the terms of the bailout were extortion. the attorney is just one of the key characters in this unusual trial look going whether the government broke the law when it took control of aig as part of the bailout. the lawsuit came from star international lead by this man. star was aig's largest shareholder. next week on deck to testify, three very familiar faces, ben bernanke, tim geithner, and henry pahlsson. gina was at the trial today. she joins me now from washington.
now gina this is a new trial, but not a new concept. hank greenberg said that aig was held to a different standard than even the banks in terms of their culpability, their responsibility for triggering the crisis, and that they were treated unfairly. what is the meat of this argument? >> yeah, you are right. he is arguing that aig got much harsher terms, about 14% on their loan, which they described as extortion in the court hearings today. that was very different from banks like citigroup or morgan stanley who they said contributed to the crisis, but got a much lower interest rate on their loans. and they questioned why that was the case, also the government took a 79.9% stake in aig as
part of the bailout terms. they argue that the government did not do that to the other banks that again, contributed to the crisis, so they are questioning why they are the only ones being punished and the other banks much got much more favorable terms. >> let's look at this. most people would probably think this would be a boring trial to cover. this is probably one of the most juicy things i have heard in a long time. the government lawyer said the goal was not to save aig, but to save the world from aig. aig says it was not responsible for manipulating mortgages. that's true. but they sold these credit default swaps and that's what the government held it responsible for doing. >> no, you are exactly right. i mean, aig is trying to act like a bit of a victim here, the shareholders are trying to act
like a bit of a victim, but they argue that aig also had responsibility for knowing what was happening on its books, and they did not know for a long time. and the hole they estimated they had kept getting biggerer, and they eventually need $182 billion. so aig is definitely not without fault here as the government argued today. >> and the board of aig is not party to this lawsuit. why? >> no, you are exactly right. and that's something that the government pointed out today, that aig and the board had an opportunity to join this lawsuit with mr. greenberg, and they declined, and in the worlds of the government attorney, he said that their message instead was thank you america. we actually appreciate what you
did for the company in rescuing us, since the alternative was bankruptcy and possible economic catastrophe. so the government made a point of making that distinction that aig and the board were appreciative where mr. greenberg was not >> the government's lawyer made pint of this is the epitome of too big to failure. hank greenberg understood that aig was so critical to the global economy that he felt he should have been able to get better terms. >> yeah, exactly. that basically he and the other shareholders felt entitled, essentially to get a better rescue, a better compensation, and the government is pointing out that aig and its shareholders were never entitled to a bailout. the government could have let them fail and it would have been a bigger moral hazard to allow a
firm in distress to dictate the bailout terms, because what could that say in the future of other financial institutions taking risks, because they know the government will rescue them on their terms. >> this is going to get a lot more interesting to the world if the three have to testify. deposed. >> yes, that was supposed to be sealed testimony, although some of it has already leaked a bit, as you can imagine of the interest in this. and next week it will be the first time they are publicly questioned about what went on at the fed, at the treasury, during the bailout and how did they decide who to rescue and who to let fail. >> that in itself is going to be interest testimony. are we going to have ben bernanke testifying?
>> there was a scheduling issue. but the judge specifically said that they have known for months when the trial was supposed to take place, so the witnesses really needed to make every effort to show up, and they said they had worked it out. so we will expect to see all of them next week. >> all right. gina thank you so much for that. investors are reportedly pulling billions of dollars from investment firm pemco after bill gross left the firm. last week the firm said its leadership team and gross has quote fundamental differences about how to take pimco forward. the wall street journal reports that investors have bulled about $10 billion from pimco in the wake of gross's departure. last week i told you about
the bad year gross had been having, the $222 billion total return fund, check your ira 401k, you might have some in portfolio. they are now investigating whether they artificially inflated its returns. coming up our series on america's middle class continues, with an update on the williams family. you won't believe what happened stay with us. ♪ >> on techknow. we're heading to cutting edge cal tech campus >> here's a look at just a few of the students shaping the future of science >> see the latest research, discoveries and breakthroughs inside some of the worlds most advanced labs. >> how do you scale somethig you learned from a jelly fish? >> techknow
♪ it's time now to check in with one of the victims we have been followed -- one of the families we have been following as part of our series rebuilding the american dream. tonight a troubling development for the williams family. stephanie williams landed a higher-paying job mentoring math teachers. but that meant the family of six had to move into the city. so they left their suburban home which is underwater, meaning they owe more than it is worth. they were renting a duplex, then they received the news that the owner
of their new app - apartment has gone into foreclosure. >> we may be back to square one with nowhere to go. >> on moving day i was very happy. i was ready to just start a new life. >> i just fell in love with the home. it's almost like a dream home. it's everything we wanted. it's space, and a decent price compared to what these homes are around here. when i first heard the home was in foreclosure, you know, i was in total disbelief and shock at that -- at that moment, because here i am thinking that i found my perfect home and the next thing i know it's like a gut punch basically. so what ended up happening is the home sold august 28th. and we're still waiting to here
if they are going to tell us we have to move. >> if we have to leaf, it will be a struggle to pack up with the kids. >> i don't even want to move them again. that's the devastating part to me. i feel just disheartened by that. especially when they just get used to being where they are, and loving it as well. i try to keep a positive mind pessimistic. >> if they can't find anybody to sell the place to, they are going to say, get out, and we're going to let it sit empty. so i'm hoping either they don't sell it, and they just go ahead and keep collecting from us, or, you know, they do sell it, and the new landlord is trying to have it as a rental property versus a home for themselves. >> perfect scenario, is the bank will say, we'll work with you
guys and give you a mortgage. >> stephanie is obviously still feeling burned from her experiences as a homeowner. the williams are still debating whether to go into foreclosure in the home that they own which is underwater, or try for a short sale where the lender agrees to take less than what is owed. buying a mid-range home is still out of reach for many families. the obvious question is why? red fin published a report titled in 2014 plenty more homes for sale that you probably can't afford. troy martin is the author of the report, and i asked him why mid-range homes are not affordable to the middle class. >> we have seen less inventory on the market, and sellers have reported that things have gotten more competitive.
but when we dug into that data to see what has really been going on, what we found was that most of that inventory has come out of the middle price range in the market. so we have a lot of sellers who have been facing high competition not just for other buyers, but from company investors who have been buying up multiple properties and converting them to rentals, and also all-cash purchasers. more than 30% of the transactions last year were all cash. and it has contributed to this really competitive market, and for people who are looking in the middle range, it has gotten tougher and tougher. >> we have done stories on those companies that are buying up homes and some people say creating a renter nation.
and some people say we're glad they had them. but where is the rest of the market? are these investors or not cash? >> it's folks with cash who figure there's money to be made. there's not a lot of new construction so people who have the liquidity to do it are coming into the market, looking for opportunities, finding homes that could use some rehab, flipping it and putting it back on the market at a higher price. >> i would imagine, though, this is -- we think about the housing market. it is called a market for a reason. why hasn't the market fixed this problem because folks are greedy so we're not really considering the needs of this -- this group that needs to be able to buy houses that they can afford? >> well, a lot of that activity has happened already. prices have come up.
and we have start to see cash buyers start to come back a little bit this year, but now prices are higher and there is still not a lot of inventory. and there hasn't been a lot of new construction either. we have seen some increase in that this year, but we're still coming off of historical lows -- >> and a lot of that new construction has been at a higher end. >> that's absolutely true. >> so what happens? noeshl norm oolly i can see something happening and i can understand what the correction is going to be, but i don't understand what this correction is going to be. >> it is a struggle and it is going to continue to be a bit of a struggle, but we're optimistic that the market is going to balance out a little bit more. we're hopefully going to continue to see new construction. and we have seen about a quarter of all homes listed for sale
have had price drops, which means that sellers are getting the message that 2014 isn't going to be like it was last year, they can't list their home for a really high price and sell way over list. buyers are not responding to that, and they can't afford homes in the price range they are being listed at. >> for those people that can't afford to buy a home commensurate with where they think they are in life, what does that mean? they become renters? >> they become renters or they have to stay patient or maybe save up for larger down payment so they can have more leverage against these different types of competition. coming up next, i'm going to tell you how the student debt crisis is burning home sales. plus mending fences with india. ♪
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existing homes fell more than expected in august. the group's performance fell 1% in july. and that followed a gain in june. the index plunged last year, but has been rising since this last march. analysts say the decline is partly because investors are buying fewer homes. the chief economist is optimistic that an improved job market will mean more first time home buyers come in and replace investors backing away from real estate. but here is a reason to worry that first time home buyers might not be able to pick up the slack. the average american who has student debt owes roughly $33,000, and that may cost the u.s. economy more than $80 billion. >> reporter: 414,000 homes will
be unsold this year, because would-be buyers who are so saddled with debt, they cannot afford to buy. in that amounts to $83 billion in lost home sales. beth acres is an economist with the brookings institution. >> there is going to be a relationship between student loan debt and the ability of young people to buy houses. >> reporter: banks have their hands tied. in exchange for strong legal protections, banks cannot approval applications if the borrowers anticipated sdet more than 43% of its income. a student debt-free household applying for an fha loan with 3.5% down, qualifies. but throw in a monthly student debt of $250 or more, and the
bank will deny the application, because the total monthly debt would be greater than 43% of its income. critics of the analysis say the complicated. >> any estimates that are only capturing the effect of having to make those payments are really missing the other piece of the equation. they have the extra bills, but have higher earnings that go hand in hand with that. >> every $250 of monthly debt lowers the mortgage limit by $44,000. that creates a catch-22 as more people take on student debt, they might also be reducing their likelihood of buying a home. that's an interesting conundrum, isn't it? today nearly 6 million households pay $250 per month in student debt. that's up from 2.2 million in 2005. joining us is moody's analytic
economist. he has done extensive research on this situation. and he says the number of 400,000 unsold homes sited in the study duarte told us about is too high. to chris, is there a number you can attach to unsold homes because of student debt? >> thank you for having me on the show. i would say it's very difficult to isolate. there are so many moving parts between tight mortgage credit. income growth that's very stagnant and a job market that still needs to grow. it's very difficult to assign a specific number to any individual part of this. clearly student next has an impact it's just debatable what the size of that is right now.
>> we hear this number, but this is a thing where averages and cumulative numbers don't actually help you. we need to figure out what the graduating student typically had on hand, and this is one of those things where these generalities are difficult to impose on the situation. >> that's absolutely right. and is the question that student debt is too high or income too low? i would fall in the camp that income growth is lacking, wage growth has been stagnant and that is really what is keeping first time home buyers from coming into the market. >> do mortgages need to change? because one of the things we heard about in duarte's piece is not having your debt average more than 43%.
is that a way or are we looking at this the wrong way? >> mortgage credit is definitely tight. the banks are all very worried about another mortgage crisis. so credit conditions definitely have to thaw. we need a little bit more loosening to attract more buyers. but i would say it's really more about the job market and income growth that would solve a lot of the problem. >> what role in your mind do students -- or people recently out of school, in the last ten years, is that sort of a segment of the home buying population that we need to be thinking about? we have spoken to home builders who say they need a different product. and the product that's available right now is priced out of the buyer.
>> yeah, i think there's some truth to that. certainly on the mortgage side of things a little bit more flexibility in the product. understanding where these buyers are coming from. and we're seeing a lot of changes in taste, and will need new product in terms of the houses these individuals want to by. more multi-family. more condos. people are attracted more to the urban areas now. and that's why it is difficult to assign a specific number to any of these moving parts. >> thank you so much for joining us, chris. >> thank you. the city of san francisco is making a bold push to support urban farming, but housing advocates are pushing back. they say a new tax is too again rousz. >> reporter: in the middle of san francisco sits a bee farm.
run by volunteers who plant flowers and fruit trees, and neighborhood. >> this was basically an old vacant lot. and it had never been developed it. >> reporter: now this lot's owner and other interested landowners have an extra incentive for setting up community gardens. a new city tax break. someone paying $10,000 in taxes before would now pay about $100. their property assessed at farm land instead of prime real estate. urban farms must sell or donate produce to the community or act as a teaching site. >> this legislation would help encourage or incent those property owners to think about turning a corner of the city that is blighted or vacant, turning it into an urban garden, a little urban oasis.
>> translator: san francisco is not the only city to have passed a law encouraging urban farms, places across the country have come up with incentives like this one. however, with san francisco's tight real estate market, some wonder whether the city can afford to use any space for anything other than housing. >> the median home prize is hovering around $1 million. the median rents or between $3,500 and $4,000. this is a crisis. let's use every bit of land as smartly as we can. >> reporter: but there are few empty lots and advocates have no illusions about how many plots can sprout up. >> we're not naive to think we can feed ourselves in a city like san francisco. but how much question we do? >> reporter: this urban farm serves those living below the
poverty line. >> they will provide over a thousand pounds of food that gets given away to people who have a immediate for fresh pro do you see >> reporter: advocates hope this will inspire more to join the movement. up next, inn dea's prime minister is taking the united states by storm. i'll tell you how we managed to change his image, and why the u.s. now considers him a necessary global partner.
♪ president obama is hosting prime minister narendra modi at the white house tonight following a soldout event at madison square garden last night. his rock star appearance represents a remarkable turn around for man that once was denied a visa into the united states. that rejection came out after riots broke out in the state where he was chief minister. he was accused of turning a blind eye to the violence. modi is now heard of the second-most-populous country in the world, and president obama
wants to improve relations between the two countries. convincing america, inc. to invest in india. he met the ceos of several large companies. modi is promising a friendlier business environment and wants american companies to help india boost its slowing economic growth. behind me you can see a one -- well, you can see modi at the moment, but in theory you are going to -- there we go -- a year on year comparison of the long-term foreign money that has come into india's economy this year versus last year called foreign district investment, it already shows -- i see -- 2014 is this collar, 2013 is purple.
it already shows a positive trend since modi took office. i don't know what that is talking about. let's get rid of this. let's talk with the american who considers modi's meeting with the corporations more important than his meeting with president obama. great to see you. >> good to see you too. >> what happened here? this guy -- virtually nobody gets that kind of attention. soldout crowd at madison square garden. he is pivoting around. indian heards who were not nearly as controversial never got that. >> that's precisely the message. he was denied a visa in 2005. the night before meeting obama there is 20,000 people cheering him on. if that's not an example of laeb frogging, i don't know what is. so he shows up, and there was
sort of this set up, with bali wood dancers, balloons, and classical singers. so the stage was set for him. >> very interesting. why -- look america cares because this is the second-most-populous country in the world. it is growing at a rate that it will become larger than china. obviously americans want access to it. but the problem has been on the indian side. it's harder for american india. >> absolutely right. for all of the stories of the growth in the last 15 years, you talk to american who goes over there to invest, and say what was your impression? and they said we didn't know it was still going to be so poor. that airport was a disaster. so we needs to turn that around. >> he did that in his home state.
so there's some feeling he can do this in the whole country. a little reminiscent to when obama became president. it's harder to turn things around than it appears to be. >> that's right. and we're talking about really turning around a socialist economy, opening it up, getting rid of some of the strangle hold, and fixing those roads and infrastructure. >> what is the biggest hold up in what is the hardest about india to do business in? because really, people will jump over a lot of hurdles to do audience. >> i think if you would talk to the ceos, they would say red tape, corruption, and it takes so long to do anything. >> what is the fastest way for india to make this happen. they have gone to these joint
venture ideas, where an indian company will pair up with an american company. but now we're looking at district investment. what are the early things he should be thinking about? >> for sure there is opening up more sectors, but then there's also taking the sectors that are already liberalized and act like they are truly liberallized. so the mining sector has years of delay to get permits. as long as it has resources folks will still be lining up, easier. >> india has a border with china. and they have had some tension recently. in this pivot away from china, is that a role where india needs the u.s. and u.s. needs india. >> i
would say india needs the u.s. if the two align that might make life easier. right now is that on the table with obama? modi has said no, you don't need to intervene in these border issues. so he has been caution about invoking u.s. muscle in his problems. >> but hanging around in the u.s. and being a rock star when he is there -- >> he's take that. >> yeah. >> if you are not regularly on quart -- quarts you should be. all right. bill gates is the richest man in america again. a lot of newcomers to the list, 27 of them to be exact. many earned their fortunes in
>> the sun isn't up yet, but david godeski is. godeski has been homeless in washington d.c. for nearly 7 years. last night, like most, he slept outside. with affordable housing getting increasingly scarce here, there's been a spike in the number of homeless. churches, food pantries, the city, are all scrambling to meet the demand. at the public library's main branch, homeless individuals rush in when the doors open, some are even dropped off by a shuttle bus from the homeless shelters. once inside, they log onto computers to job hunt or check email. they meet friends or just read, protected from the elements. >> for many years we would sort of open our doors and say "okay, we've done our job", because we're providing them a warm place to go if they've got no place else to be. >> now, social worker jean badalamenti will help provide information on homeless services and will "sensitize" staff.
while government, residents and local businesses argue over the role of the libraries, david godeski is just glad they're here. >> having a place like this where things are controlled, it's a godsend. >> so godeski will be back every day he can. a construction project is off schedule, probably doesn't surprise anyone, but the reason behind this delay is mainly because of a broken drill. an $80 million drill named big bertha that has received plenty of attention from this show and others. >> reporter: this is a huge project, the essence of a mega project. chris dixon is the man in charge
here, running the biggest tunnel-boring machine in the world. the machine, nicknamed bertha is big all right, 7,000 tons. big enough to have its own control room. but it is stopped dead and hasn't made any forward project in ten months. tunnel. >> bertha's massive drilling head broke down when it chewed into an 8-inch steel pipe. do these other go exactly the go? >> no, there's always hiccups that occur. >> reporter: to fix it the drilling head will be taken out, repaired, strengthened, and
reinstalled. while there is still plenty more work to be done, bertha will not be able to work again until next march. this is one of the biggest construction boondoggles country. >> it's really a loss that we can't afford. >> reporter: the tunnel will replace see ats 60-year-old earthquake damaged waterfront highway. it carries more than a hundred thousand cars aday. voters picked the tunnel option. total projected cost, about $3 billion. including nearly a billion in federal money. project managers say they are not over budget yet.
>> the contractor is committed to completing what they started, and frankly so are we. >> reporter: do you still have full faith in what you call the bertha? >> yes. >> reporter: meanwhile work goes on with 90% of that two-mile tunnelling job still ahead. okay. boondoggle or not, seattle's big dig is the biggest transportation project out there today. and no one can deny more needs to be done to repair the infrastructure. the american society of civil engineers gave this country's road and transit systems a d. the group said 42% of american's major urban highways continue to suffer from congestion, costing $101 billion in wasted time and fuel ere year. seattle was forced to do
something because of the dangers the highway posed f after sustaining a earthquake. it decided to take an expensive root. it's clear now the $3 billion estimated price tag will go up, but that's no reason not to complete the project, and just because such mega projects come with mega costs doesn't mean we should put off making necessary investments to repair america's infrastructure. yeah, big projects typically come with cost overruns. that speaks ill of planning and approval, doesn't speak ill of the need to fix america's decaying infrastructure. america's only going to keep its competitive edge by making the necessary investments to build and maintain a first-rate infrastructure that is going to helping us all grow. that's our show for today. i'm ali velshi. thank you for joining us. ♪
>> tensions rise as i.s.i.l. fighters move closer to a key kurdish town in syria. hello, i'm darren jordon, this is al jazeera live from doha. also - hong kong's leader says china will not back down as they set a wednesday deadline. afghanistan to sign a long-awaited security deal allowing some u.s. troops to stay on the ground. i'm outside new delhi where a gandhi statue is being made. we speak to the artist, sti